The History of Unification As part of the reorganization of Svyazinvest Holding Company its seven regional communications companies in the Far East have formed Dalsvyaz Company as branches in the Primorye, Kamchatka, Magadan, Sakhalin, Amur, Khabarovsk and Jewish Autonomous regions. The reorganization process lasted two years from 2001 to Shares that belonged to holders of the merged companies were converted into shares of Dalsvyaz. The issuance was registered by the Federal Securities Commission of Russia on July 30 of On December 24 of 2002 an extraordinary meeting of Dalsvyaz’ shareholders elected Igor V. Zabolotny as General Director, adopted a new Charter and approved of new directors for the Board and new members of the Auditing Commission. The Board of Directors endorsed members of the Executive Commission, which is the managing body, on January 31 of 2003.

Description of the Region The Far Eastern region is the largest in Russia measuring 6,215,900 square kilometers and taking up 36.4 percent of the country’s territory. The Far Eastern region includes the following smaller regions that account for the following percentage of the entire Far East: There are 70 major cities in the Far East. The number of residents totals more than 6 million, including million in cities.

Description of the Region The region borders Japan, the United States, China and North Korea. Seaports handle export flows of Russian cargo to international markets and deliveries of import goods from Asian Pacific countries to Russia. There are 32 seaports, including 22 commercial ports and 10 fishing ports, on the coast of the Far East. The main railway lines traverse the central and southern areas of the Far East. These rail lines are eastern portions of the Trans-Siberian and Baikal-Amur railroads. The Trans-Siberian Railroad is the larger one. The Trans-Siberian and Baikal-Amur railroads terminate at the region’s seaports while a number of rail links cross over into northeastern China. The region has considerable deposits of mineral resources, non-ferrous and precious metals, iron ore, coal (20 billion metric tons), oil (9.6 billion metric tons), natural gas (14 trillion cubic meters) as well as timber and hydro energy resources. Estimates show that Far Eastern shelf has up to 30 billion metric tons of hydrocarbons. More that 60 percent of Russia’s fish and sea products is produced here. Far East has areas offering beneficial conditions for economic development. They are the Magadan, Sakhalin, Primorye and Khabarovsk regions that offer favorable terms for payment of taxes and customs duties.

Share of the Merged Companies in the Chartered Capital

The chartered capital is $ 40,508, 252 It includes Regular shares - 95,581,421 pieces Preferred shares - 31,168,901 pieces With a face value of $ 0.32 The chartered capital

Distribution of the Chartered Capital

Distribution of Voting Shares

Description of Shareholders

Share of the Merged Companies as per Cost of Net Assets The total worth of net assets as of September 30, 2002 was $

Shares of the Merged Companies from

Preliminary Financial and Economic Indices for 2002 Type of Indices2002 Receipts from sales of goods and services thousands of USD Profits from communications services thousands of USD Amount of communications services sold to the public thousands of USD Spending on regular types of activity thousands of USD Profits from sales thousands of USD Pre-tax profit12793 thousands of USD Net profit thousands of USD Profitability rate in profit from sales in pre-tax profit in net profit 23.4 % 9.3 % 4.6 %

Forecast of the principal financial and economic indices for 2003 JSC Dalsvyaz Thousands of USD Receipts EBITDA Profit from sales Net profit from sales15856 Average value

Structure of profits from Receipts of Dalsvyaz thousands of USD Year (plan)2004(forecast)2005 (forecast) Receipts (in thousands of USD) thousands of USD

Structure of spending for Thousands of USD

Tariff policy Phone monthly fee The main goals for 2003: Transition to a unified level of tariffs for individuals and organizations in the coverage area of the company Raise the tariff for individuals to rubles per month Raise the tariff for organizations to rubles per month $

Development of the telephone network Growth of long distance telephone channels (in thousands of kilometers) Growth of the number of main telephone sets Capacity of local automatic telephone stations, subscribers Ration between usage and capacity of the telephone stations (percentage)

Capacity of the telephone network from Number of subscribers

Density of telephone network from Ratio of telephone sets per 100 people

Long distance traffic in 2002 (in thousands of minutes ) International traffic in 2002 (in thousands of minutes) Dalsvyaz’ total long distance traffic within Russia was 430,261 thousands of minutes. Dalsvyaz’ international traffic was 27,289 thousands of minutes.

International traffic from (in thousands of minutes)

Long distance traffic within Russia from (in thousands of minutes)

Amount of capital investment from Thousands of USD Type of Indices Ratio between 2003 and 2002 Amount of capital investment thousands of USD thousands of USD thousands of USD 223,8 %

Amount of capital investment (in thousands of dollars) per branch from Thousands of USD

Investments (structure) from

New capacity from Number of subscribers Type of work (plan) Ratio between 2003 and 2002 Total new capacity (in thousands of subscribers) 53, ,413203,6% Including replacements (in thousands of subscribers) 10,2834,893,892269,8 %

Core Assets Put into Operation from Thousands of USD Type of Indices (plan) Ratio between 2003 and 2002 Core Assets Put into Operation thousands of dollars thousands of dollars thousands of dollars 245 %

Amount of Capital Investment from (in thousands of dollars) Thousands of USD

Program for Issuance of American Depositary Receipts Dalsvyaz is implementing a program for issuing American Depository Receipts of the First Level. JP Morgan serves as a depository bank (Dalsvyaz’ ADR ticker is FEEOY). Shareholders have the opportunity to sell their shares on international markets through the depository bank. American Depository Receipts may be issued for 70 percent of regular shares.

Principal Goals for Raising Investment Attractiveness Have the shares listed by Russia’s leading stock exchanges Adopt a code of corporate behavior Receive a rating of corporate management Raise the liquidity of shares by several times Raise the company capitalization to US$120 million in 2003, and to US$190 million before Continue work on the ADR program Continue work on IR

Marketing Strategy The Main Targets for Marketing Strategy for : 1.The main geographical segments are coastal cities with a high population density 2.The main consumer groups are general public and small and medium-sized businesses 3.The goal is to retain the market share of 75 percent 4.Improve customer service by introduction of corporate culture and progressive quality control systems, particularly ISO 9000.

Technical Policy The main targets for development in 2003: Digitalization of intra zonal and access lines Introduction of intellectual network services. Development of multi-service network throughout the region. Development of broadband Internet access. Development of intellectual services, IP and computer-based telephony. Development of information services. Development of documental communications (X.400). Development of videoconferencing services. Development of mobile communications. Development of additional services based on digital telephone stations. Providing the service of building corporate networks.

Technical Policy 1. Digitalization of intra zonal and access lines based on construction of fiber optic cable lines and space communications systems. The main method of digitalization will be construction of transport networks of synchronized digital hierarchy (SDH). 2. Digitalization of the telephone network will be implemented through putting online new telephone stations and phasing out the old ones. This will enable growth of the amount of additional services using the digital stations. 3. Introduction of intellectual network services will take place in the Primorye, Khabarovsk, Magadan and Sakhalin regional branches. These branches will also expand the nodes for providing STK services using computer-aided telephony. 4. Construction of multi-service telecommunications network throughout the entire Far East enabling broadband access to the data transfer network. Development of the project will allow the company to increase sales of information services, corporate network building services and documental communications services. 5. Development of mobile communications services.

The main goals: Conduct a unified tariff policy throughout the Far East and shift to a unified level of tariffs for individuals and organizations in the coverage area of the company. Reduce the need to subsidize low profitability services from revenues of the high profitability services and raise tariffs to the level of economically reasonable costs (including an investment component). It is planned that tariffs for the services of local telephone communications will grow by 30 percent in Raise the tariff for individuals to rubles per month and to rubles per month for organizations. Shift to the by-the-minute system of billing the local telephone communications. The by-the-minute system works in Yuzhno-Sakhalinsk in the Sakhalin Region. In 2003 the new billing system will be introduced in Vladivostok and Ussuriisk in the Primorye Region and in Khabarovsk in the Khabarovsk Region. Tariff Policy

Personnel policy from Optimization of personnel quantity in accordance with the business plan (5-7 percent annually) The company intends to spend 2 percent of the salary fund on personnel training programs. By percent of the personnel will have been trained. With the purpose of raising work efficiency contemporary labor motivation techniques will be applied to up to 40 percent of employees. Employee testing and evaluation programs will be applied to create a team with a high potential.

Corporate Reorganization The main goals: transition to a unified accounting policy and divided accountancy of outlays; developing and introduction of procedures for budgeting and investment planning; creation of a mechanism of cost management; developing and introduction of a flexible marketing strategy through management of services; tariff regulation through pricing based on maximum costs; introduction of a personnel management program.

Dynamics of trade in Dalsvyaz shares in the RTS from (first quarter) Total amount of trade in millions of US dollars Total amount of trade in millions of shares Number of transactions

Regular shares Pricing dynamics from (first quarter) Dynamics of Trade from Year Regular shares, amount in USD Regular shares, number Regular shares, number of transactions (January to February)

Preference shares Pricing dynamics from (first quarter) volume of trade in US dollars The medium balanced price in US dollars Dynamics of Trade from Year Preference shares, amount in USD Preference shares, number Preference shares, number of transactions (January to February)

Millions of USD Capitalization of Dalsvyaz (in millions of USD)

Capitalization of Some Companies in the Far East in millions of USD on 03/01/2003